How does romney avoid taxes

It is policies such as these which constrain mobility—literally the likelihood of a person to move up or down the distribution scale of income, earnings, or wealth. The first two lightly shaded bars show that 65 percent of children born to parents in the bottom wealth fifth ended up in the bottom two wealth quintiles 7 percent moved to the top quintile while more than one-third of children born to parents in the top wealth fifth ended up in the top quintile.

If there were perfect mobility, all the bars in the graph would equal 20 percent. In short, people at the very top are able to take advantage of a number of different tax loopholes that can save huge sums of money—which they can then pass tax-free to their heirs. As the debate continues about tax fairness, it is key to keep in mind that loopholes and preferential tax rates afford massive benefits at the very top of the spectrum. By buying rigged stock with his limited IRA dollars, Romney got to reap the bonanza tax-free.

Yet under the carried-interest loophole, the earnings are taxed at the capital gains rate of 15 percent, rather than the income-tax rate of 35 percent. Indeed, more than a decade after he left Bain, Romney is still booking carried interest as though he were actively leading the firm. Not content with the carried-interest boondoggle, Bain also uses a scheme known as fee conversion to transform smaller management fees — which are supposed to be taxed as regular earnings — into investment income taxed at only 15 percent.

How did Romney skirt the limits on gifts? Tax experts believe that he made his contributions to the trust in the form of the carried interest he received from his Bain funds. In reality, though, Romney could have sold his carried interest to a third party for millions — making it absurd for him to pretend that his gift had no market value. Instead of having the trust pay taxes on its profits, Romney pays the tax bill himself.

That keeps more money in the trust — amounting to another massive transfer of wealth that evades the gift tax. Mitt Romney illustration Illustration by Robert Grossman. Newswire Powered by. Close the menu. Bain was involved in overhauling dozens of companies, and in some cases laid off thousands of workers. Gingrich continued to pound on the tax return theme Tuesday.

Gingrich added that he would release his tax returns this week. As Texas governor, Perry has released his each year. Gingrich and Perry are battling former Pennsylvania U. The Romney campaign dismissed the latest calls to release his tax returns as a sign of desperation. By Sam Youngman 8 Min Read.